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CME Group spills beans on new cocoa contract

By Oliver Nieburg+

16-Jun-2014

CME Group to introduce cocoa contract on London futures market
CME Group to introduce cocoa contract on London futures market

Futures exchange company CME Group has made a “strong commitment” in the cocoa market and plans a new contract to rival the IntercontinentalExchange Group (ICE).

The Chicago-based firm will launch a cocoa contract to compete with ICE’s Liffe on the London futures market.

Transparency

Jeffry Kuijpers, executive director of agricultural commodities, told ConfectioneryNews: “There have been some industry events over the last 12-18 months which have prompted a lot of those customers to welcome someone else to have a look at the cocoa derivatives industry.”

In July 2010, 16 European industry players complained to Liffe of market distortion and lack of transparency. Concerns were raised over monopoly power abuse by exchange-registered warehouses. See HERE.

ICCO reacts

Jean-Marc Anga, executive director of the International Cocoa organization (ICCO), welcomed the addition of the CME group during a press conference at the World Cocoa Conference last week.

“We all remember a couple of years ago the events in the London market that created some suspicion about transparency in terms of functioning.

“For us as an organization, market efficiency and market transparency, these are key features that we believe will contribute to providing remunerative incomes for farmers.”

“In this respect having one more player in addition to the one player that we, in effect, have is good news."

No specs yet

The CME Group is dominant in corn, wheat and soybeans and said it chose to up its presence in cocoa after requests from existing customers.

“There are a lot of regulatory approvals and internal things we need to work through, so there’s very little we can share on the exact specs,” said Kuijpers.

“What we have communicated is that we a committed to the cocoa market to try improve upon the current offering or at least provide something that’s competing.”

“There are no timelines – just a strong commitment to become active in the cocoa sector.”

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